Nunavut uranium mine could open by 2017

Areva's Kiggavik mine in Nunavut, northern Canada, could be open as early as 2017, CBC News is reporting.

With the price of uranium down about 25% from levels reached before the Japanese earthquake and nuclear disaster in Japan last year, any new uranium mines will be contingent on a price rise in uranium oxide, a key ingredient in the nuclear reaction.

CBC News quotes Areva Resources spokesman Barry McCallum saying the company is bullish on the uranium price recovering by 2017 when French nuclear giant Areva, the world's second largest producer of uranium behind Cameco, plans to get its Kiggavik mine up and running:

"We keep looking at prices, but the important one is the price when we're making a development decision in a few years,” he said.

CBC also quotes Scotiabank commodities analyst Patricia Mohr saying that prices "will eventually go back up again and long before any uranium mine opens in Nunavut."

Uranium-oxide concentrate for immediate delivery sold for $51.25 a pound this week. The price of the nuclear fuel has hovered around the $50-mark for the better part of a year but is still down more than 25% from levels reached before the March 11 earthquake and tsunami in Japan that damaged the Fukushima nuclear power station sending prices tumbling.

Uranium oxide prices peaked above $70/pound at the start of 2011. The Financial Post reported earlier this week JPMorgan forecasts that price could rise to $80 by 2014 “as supply deficits catch up with demand.”

Areva says on a project website that Kiggavik is still being explored and currently undergoing an environmental assessment. Regulatory approvals could happen by 2015 at the earliest, with construction starting two years later. Nunavut conducted a series of public forums last year to help develop a uranium mining policy for the northern Canadian territory.

The capex to bring the mine into the production is estimated at $1.5 billion with annual operating costs at about $200 million. Areva estimates the deposit to contain about 44,000 tonnes uranium ore reserves. Production would be in the order of 2,000 to 4,000 tonnes of uranium concentrate annually for a 13 to 25-year minelife.

Areva's stock has taken a beating over the past year. Shares are down 58% over the past year and on Thursday it hit a 52-week low, trading in Paris at 12.85 euros.

AFP reports the company offered on Friday to reprocess in France some of the spent nuclear fuel currently in cooling pools at Japan's stricken Fukushima plant.

Andrew Topf is an editor at MINING.com. With a background in newspaper and trade magazine reporting, Andrew specializes in writing about mining and commodities. He has written for the Black Press newspaper chain in British Columbia, Business in Vancouver, and Baum Publications.